Fidelity Investments' latest report on 401(k)s has both good news and bad news about our preparedness for retirement.

The good: The average 401(k) balance managed by Fidelity reached a record $89,300 in the fourth quarter of 2013. That's a 15.5% increase from a year ago and almost double the low of $46,200 set in 2009.

The number is higher for pre-retirees 55 and older: $165,200.

The bad: More than one-third (35%) of all 401(k) participants cashed out their accounts when they left their jobs in 2013. That number is even higher among younger participants ages 20 to 39.

"No one will complain when account balances go up," she says. But most of that increase — 78% — was due to last year's strong stock market. Just 22% was due to contributions. In normal years, those numbers are closer to 50-50, she says.

She says Fidelity is very concerned about the number of people who cash out their 401(k)s when they change jobs.

"What's concerning there is many people, when they cash out, I don't think they fully realize the long-term impact," Thompson says. "In the short term, they will get cash, but in the long term, they are missing out on what that money could grow to."

"Individuals who cash out of their 401(k) plans are committing the equivalent of investment suicide," says W. Kirk Taylor, chief investment strategist for 1st Portfolio Wealth Advisors in Vienna, Va. "The combination of penalties, taxes and lost opportunity costs generally have disastrous implications to an investor's long-term retirement plan."

Thompson said the average cash-out is $16,000. For a 30-year-old, that could mean the loss of $461 in monthly retirement-income cash flow (assuming the person retires at 67 and lives into their 90s.

"What you're really losing is a lot more than $16,000, long-term," Thompson says. "When you are younger, it's hard to conceive of that. Five hundred dollars a month can pay for a lot of things."

The other shock for people withdrawing that $16,000 instead of moving it to another employer or private tax-advantaged account: After $3,200 in federal and state taxes and another $1,600 in early-withdrawal penalties, it leaves only about $11,200.

"For truly cash-strapped investors, a better option may be to rollover their 401(k) balance to their new employers 401(k) Plan (if allowed) and take a loan against the rolled over balance," says Taylor. "There are pros and cons to this approach, so investors should weigh them accordingly and consult with a financial professional."

Fidelity is the nation's largest 401(k) provider in the nation. The latest data are based on a review of some 12 million accounts, Thompson says.